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Non-Traditional Lenders

Non-Traditional Lenders

With emerging technologies and increasing connectivity, there is now a range of non-tranditional lending options for business owners and entrepreneurs. While these options often require business owners to do their "homework", the rewards can be worthwhile. Non-traditional lenders can become opportunities for business owners who do not qualify for traditional financing options.

Pros:

Lower barriers to access capital, your story can matter

Flexibility in loan terms and repayment

Can help supplement already existing financing options

Cons:

Typically costs more to borrow money (15-50% APR)

Requires business owners to be savvy enough to do their "homework"

Limited amounts, might not provide all of your financing needs from one source

Microlenders

Microlenders specialize in providing small financing options to business startups. Typically, these lending options are geared towards minority, women, and low-income business entrepreneurs. Microlenders can lend you $5,000-$25,000 with average amounts nationwide being $13,000. These lenders come in various forms; through community banks, nonprofit organizations, and private companies. Below are some known microlenders:

Crowdfunding

Crowdfunding is a fairly recent financing option for business owners who are looking to leverage their connections and networks. When you pursue crowdfunding options, you are going out to individuals and asking them to come together to fund your business. Essentially, you are charged with raising the money you need. There are typically 2 different types of crowdfunding options for you to pursue:

Donation/Sponsorship:

Any funds raised are not required to payback, but often you have to provide goods/products/services to reward donors

Investment:

Any funds invested are required to be paid back

There are many platforms that offer a full suite of crowdfunding services. Be sure to pay close attention to fees, benefits, and limitations of each platform.